The real estate market in Santa Cruz has been on such an upward trajectory for the last 10 years that many have been wondering, "how much longer"?
Well, it's finally here: 2019 should be the year when things level out into a more balanced market.
However, as we'll see, some issues remain for buyers...
National Real Estate Projections for 2019
Rapid gains over the last 10 years have erased the losses of 2008. Now we're expecting to enter a cooler market in 2019, favoring buyers a little more than in the past.
However, "greater balance" shouldn't be interpreted to mean stagnation, or even a new status quo. First, prices are still expected to rise, just at a slower rate. And second, where this slowing down goes is still unknown - it could be a brief pause before a continued upswing, or the start of a more general decline.
Furthermore, expected price increases through 2019 are despite the projected gains in inventory.
Higher mortgage rates will also mean greater affordability pressure for buyers in 2019. At present, many would-be buyers are experiencing price fatigue, opting instead to rent or look about for more affordable markets.
The new tax regime could also throw a spanner in the works, but the long term effects as yet are unknown. However, it is expected to favor renting over home-ownership in the short term.
Santa Cruz in 2019 - Buyers
Buyers in 2019 will be tempted to adopt the "wait and see" approach, holding off from entering the market, especially for fear of buying at the peak of home pricing.
However, it's important to remember that prices are still projected to rise in 2019 and beyond, along with interest rates as well. As such, if you're planning to buy soonish (sometime in the next year or two, or three), it may be a good idea to do it now, before property becomes even more expensive.
Those buying at or near the top of Santa Cruz's property market have little cause for concern. Given the strong market fundamentals and improving inventory, buyers of up-market homes will have both more options and more confidence that their properties will maintain value.
Also, recent gains mean that there are less competitors in the market, so you may find yourself in a better bargaining position with prospective sellers.
Santa Cruz in 2019 - Sellers
Remember that Santa Cruz is still going to be a sellers market in 2019. However, increased competition means that the bidding wars might not be so fervent as they have been in the past. Sellers should expect to offer modest price reductions going forward.
As mentioned before, things are expected to be even tighter at the lower end of the market, as many buyers are priced out or simply leave for cheaper areas.
However, a significant amount of demand will come from millennials, and even students, looking for more affordable properties in the Bay Area.
Santa Cruz Forecast
In short, the continuously rising prices over the past few years have priced out many potential buyers, leading to weaker demand.
Home prices will probably keep rising, just at a slower rate. Homes will also be less affordable due to increases in interest rates.
Though the market is becoming a more level-playing field, it will continue to favor sellers.
Posted by Lauren Spencer on
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